Vote allows PG&E rate hike for safety improvements

December 20, 2012 6:00:09 PM PST

by John Alston

SAN FRANCISCO --

Making PG&E's gas pipelines safer will now come at a cost to customers. In a decision that came down Thursday, ratepayers will pay a large portion of the price to try and prevent another San Bruno disaster.

In the end PG&E did not get its way, the utility wanted customers to pay for almost all of the upgrades. The PUC shot that down. It does mean, however, that customers will see their bills go up over the next few years.

More than two years after the explosion, the fight over who pays for safety improvements is still a raw issue.

One of the speakers at the CPUC meeting was Rene Morales, whose daughter was killed in that fireball, "The victims shouldn't have to suffer because PGE is making a profit from this explosion," Morales said. "They're picking up as though nothing happened and business as usual."

PG&E will have to test nearly 800 miles of pipeline and replace almost 200 miles. It's a $2.2 billion dollar upgrade.

The PUC decided that customers will pay more than half, about $1.2 billion, for new pipeline and valves. Shareholders would pick up the rest, about a billion dollars, for safety testing and improved recordkeeping.

"Today's decision is about moving forward and building the safest natural gas infrastructure in the nation," CPUC Commissioner Mike Florio said. "That is our goal and that is now PGE's goal as well."

The commission's decision will raise average residential rates about a dollar to two dollars a month. But local leaders are furious that the commission let PG&E continue to earn a profit from making capital improvements.

"They blew up our town," San Bruno Mayor Jim Ruane said. "They killed eight people and now they're making 11 percent on the improvements they should have been making all along."

Sen. Jerry Hill, D-San Bruno added, "PG&E owns the State of California and the PUC. This is a perfect example of that. It's shameful that they would allow PGE to profit from their behavior, their negligence, their poor maintenance and in my opinion their criminal activity."

However, PG&E spokesperson Brittany Chord argues, "The commission did not vote to fully fund the plan today, but we will continue this important work, and also our shareholders have funded about 1.5 billion dollars since 2010."

The actual rate increase will be in the range of one and a half to nearly two percent for residential customers. The commission also said customers will not have to pay for any cost overruns.